Investing in a Patent with Your Self Directed Roth IRA

Online, January 31, 2014 (Newswire.com) - Entrepreneurs are a unique group of people. Most entrepreneurs are extremely motivated and ambitious individuals that are looking to build a business that will run and be extremely successful. When an entrepreneur starts out on this journey to build a business there is typically some sort of business plan in place that most likely does not show the end result of the business that is built, but it is a starting ground as he or she moves forward.

When an entrepreneur comes up with a new product typically there will be some market research done to ensure it is needed in the market place, then a patent is acquired. Once a patent is in place there are typically three options for the entrepreneur, 1) A business could be built around the product as the entrepreneur seeks to build an enterprise that can be extremely successful in manufacturing and selling the product, 2) the product could be licensed to a competitor then the entrepreneur can collect a royalty for the life of the patent, and 3) the patent can be sold to a third party that will likely build the business or hid the product because they don't want it to overthrow what is currently in the market.

Self directed Roth IRAs are special kind of investment tool that allows the entrepreneur to profit from the patent by utilizing wither option 2 or 3 without having to pay taxes on the proceeds. The Roth IRA structure allows the account holder to pay taxes on the funds that go into the account, but not be liable to pay taxes on any profits that are made from the IRA's investments. If the account holder, in this case the entrepreneur, seeks to build a business out of the patented product he or she will not be able to utilize the IRA if he or she plans to play an active roll in the management of the business.